BlackRock CEO promotes corporate "purpose" & calls on company leaders to more actively address societal issues


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1 February 2019

The backlash to Larry Fink’s letter shows how far business has to go on social responsibility

Author: Mark R. Kramer, Harvard Business Review

Larry Fink, CEO of BlackRock, the world’s largest investor with $6 trillion under management, evoked heated controversy with his remarks last week that his company would change its hiring and potentially its compensation structure to advance diversity and ensure that five years from now the company is not just “a bunch of white men.” This follows on the heels of his annual letter to CEOs asserting that companies need to embrace a purpose beyond just profit maximization... Critics, according to Fox Business, were swift to accuse Fink’s commitment to diversity as a form of “corporate socialism,” complaining about “the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.” 

... I couldn’t disagree more. Business leaders must finally, once and for all, let go of the outdated and erroneous notion that social factors — and not just diversity — are irrelevant to the economic success of our companies... Committing to a purpose and having a positive social impact is increasingly central to good management and shareholder value.

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30 January 2019

Decoding BlackRock Chairman Larry Fink's Letter To CEOs On The Importance Of Purpose

Author: Forbes, Dan Pontefract

"Decoding BlackRock Chairman Larry Fink's Letter To CEOs On The Importance Of Purpose", 29 January 2019

[In Fink's 2019 letters to CEOs] he sets the stage of today's calamitous situation with the following lines...

  • The global landscape is increasingly fragile and, as a result, susceptible to short-term behavior by corporations and governments alike.
  • Around the world, frustration with years of stagnant wages, the effect of technology on jobs, and uncertainty about the future have fueled popular anger, nationalism, and xenophobia...

...Fink rightly points out that as the world crumbles, it just may be the CEO's role to save it. He suggests there is "an extricable link" between purpose and profit. "It must begin with a clear embodiment of your company's purpose in your business model and corporate strategy," he wrote. "Purpose is not a mere tagline or marketing campaign; it is a company's fundamental reason for being – what it does every day to create value for its stakeholders. Purpose is not the sole pursuit of profits but the animating force for achieving them."...

...Further down the letter, Fink highlights the positive relationship between purpose and profits...

...I discovered that when an organization balances the obvious need for profits with an operating model that is purpose-driven, all stakeholders (not just shareholders) end up winning. Employees are happier. Customers return for more purchases. The community earns positive spin-off and windfall benefits. The environment and our planet is protected. And yes, profit seekers and shareholders are rewarded.

But it requires a higher level of leadership, not just of the CEO, but the board, the C-Suite, and every leader throughout the firm...

...It is time to stop the rhetoric of purpose and instead CEOs and senior leaders ought to do something about it.

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30 January 2019

What Larry Fink’s 2019 Letter Means for the Future of Business

Author: BSR, Alison Taylor

"What Larry Fink's 2019 Letter Means for the Future of Business", 24 January 2019

Last year, Larry Fink's annual letter to CEOs forged its way into public and corporate consciousness. In it, Fink, chief executive officer of BlackRock Inc., the world's largest investment firm, made the bold declaration that "to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society."

...This year's highly anticipated letter from Fink appeared on January 17, reiterating and expanding upon many of his 2018 points. Its advice to business reflects sustainability best practice and is fantastic news for anyone with concerns about today's social disruption and environmental destruction.....

"Purpose" is happening, whether we like it or not

 A 2017 survey indicated that although businesses are highly enthusiastic about it, there is no consensus as to what "purpose" actually means...[ Fink]  equates purpose with long-term value creation and hails it as an "animating force" for achieving profits via a stronger strategy and culture, not as a detriment to growth...

...Questions about implementation are growing louder

...BlackRock aims to effect change through engagement and discussion with companies, not hostile shareholder resolutions—and it has cause to argue that this is working. The 2018 proxy season saw far fewer shareholder proposals on climate, precisely because the energy and extractives sector is shifting its approach in an attempt to anticipate and respond to pressure...

...This year's BlackRock letter marks a further step forward in an increasingly high-stakes debate about the future of the corporation and its nascent shift from shareholder value to stakeholder trust, from risk to impact, and from growth to sustainability.


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25 January 2019

Larry Fink's 2019 letter to CEOs: Purpose and profit

Author: Larry Fink, BlackRock

Around the world, frustration with years of stagnant wages, the effect of technology on jobs, and uncertainty about the future have fueled popular anger, nationalism, and xenophobia. In response, some of the world’s leading democracies have descended into wrenching political dysfunction... Unnerved by fundamental economic changes and the failure of government to provide lasting solutions, society is increasingly looking to companies, both public and private, to address pressing social and economic issues. 

Purpose is not the sole pursuit of profits but the animating force for achieving them... Purpose drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders... As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity. Companies cannot solve every issue of public importance, but there are many – from retirement to infrastructure to preparing workers for the jobs of the future – that cannot be solved without corporate leadership... Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term. Companies that ignore them stumble and fail...  Attracting and retaining the best talent increasingly requires a clear expression of purpose. With unemployment improving across the globe, workers, not just shareholders, can and will have a greater say in defining a company’s purpose, priorities, and even the specifics of its business... As wealth shifts and investing preferences change, environmental, social, and governance issues will be increasingly material to corporate valuations. 

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18 January 2019

Larry Fink's letter to CEOs asserts belief that environmental leadership & social responsibility will become "increasingly meaningful to corporate valuations”

Author: Mark Cobley, Financial News

BlackRock chief executive Larry Fink said the $5.9tn fund manager will pressure company bosses on diversity, long-term pay and bonuses and the environment this year... He also returned to a favourite theme: a call for companies to take more responsibility for ensuring their workers have a good standard of living in retirement... But the [letter]... fell a long way short of the demands of green campaigners who targeted BlackRock yesterday with a fake letter from Fink, successfully hoaxing some media organisations.

“The world needs your leadership,” [Fink] told his readership of chief executives... He also set out his belief that environmental leadership, social responsibility and good corporate governance “will be increasingly meaningful to corporate valuations” as trillions in wealth assets transfer to millennial investors. He cited surveys that claim younger savers care more than their parents about social issues... He said BlackRock would focus on five areas in its discussions with companies in 2019: “governance, including your company’s approach to board diversity; corporate strategy and capital allocation; compensation that promotes long-termism; environmental risks and opportunities; and human capital management”.

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17 January 2019

BlackRock chief Larry Fink tells CEOs to fix society's problems in an increasingly divided world

Author: Meghan Morris, Business Insider

In this year's letter, the manager of $6 trillion doubled down on his argument that businesses have a responsibility to the communities they serve, not just to their bottom line, since "profits and purpose are inextricably linked."... The 2019 letter... instructs companies to lead better in a divided world... As governments fail to address social and economic issues, the public increasingly looks to corporations for leadership on problems from protecting the environment to racial inequality. While Fink acknowledges companies cannot solve every issue, he can highlights a few dilemmas that require some corporate action, including retirement, infrastructure, and job preparation.

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